How to get out of Fixed Mortgage?

O

Oriel27

Registered User
Messages
36
Hi All,

This question has probably been asked before, i searched for it but i couldnt find it.

Im on a 5 year fixed mortgage. I have 2.5 years completed, i have 2.5 left.

its fixed at 4.2%. I pay 1366 a month mortgage.

I went to my bank manager there 3 weeks ago, he told me i would have to pay 11K to get out of it. If i got out of it i would only be paying 1130 a month.
At the minute i have the house rented, i have to add, 150 a month to it., i get the rest in rent etc.

Im fierce worried about all this.

i recently lost my job, im afraid i could loose my tennant at the end of year.
i feel that i will be so trapped. i feel like giving the keys back to the bank, all this hassel isnt worth it.

anyway when i visited my bank manager, he told me there is nothin he can do for me, was very very unhelpful and ushered me out of his office.
raging as i were, i went and got other advise from people, they told me that 11K to get out of a 2.5 year fixed mortgage is too much to pay..... could this be right?
if i went to the bank and told them, this amount X is what i can afford to pay you, will this work?
have i any options at all?
i see everyone around me having there mortgage decreasing rapidly, i feel i just cant cope.
Please help.
 
There are lots of threads Oriel - try searching again.

Penalties to opt out of fixed rates vary widely - I've heard of anything from €5000 to €15000. It's not a matter of what is too much - it's up to the bank largely.

From their POV, you entered into an agreement with them - if you want to break it, and especially if they lose out as a result, of course they are going to try and recoup some of the revenue they will lose. It's unfortunate to be stuck in a fixed rate when rates are currently so low but plenty of people are in the same boat.

As it happens, I'm on a 5.2% fixed rate - which ends in September thankfully.

BUT, more importantly, you may be eligible for mortgage interest support (not sure about the exact term) - check the key posts in the welfare/benefits thread. Up to 75% of the interest element of your mortgage may be paid for you whilst on JB.

Good luck.
 
Hi Oriel72,

A fixed rate mortgage could be a blessing in disguise. The interest rates at the moment are too low. The ECB, the British and the Americans all recognize this. With all the money being printed at the moment, this is going to lead to rampant inflation and one of the ways to reign in this inflation is bumping up the interest rates.

So if the interest rates increased dramatically, which they will over the next couple of years, you'll be laughing because of your fixed rate mortgage.
 

I think you probably need to sell the place as you just can't afford the risk.

If you were to sell you could try negotiate avoiding the fixed rate penalty on the basis that most banks are just happy to get their money back these days.

If the proceeds of the sale would not be enough to cover the mortgage you could negotiate a repayment plan for the excess.

Say your mortgage is for €250k and you sell for €220k. I think you'd be far better off selling and trying to deal with a €30k debt than having the entire €250k (and possibility of no tenant) hanging over you
 
If you entered a fixed rate agreement you can't just break out of it because interest rates have gone down and you feel your repayments are too high.

The penalty you have to pay to break out of it was agreed when you entered the contract. Interest Ratres are going to shoot up over the next couple of years to to control the massive inflation rate we are facing into. You will be thankful then that you are on a fixed rate.
 

Would selling not be mad?

i would say i would have to pay about 30K to the bank after i sell. Even selling i would have lost about 25K deposit as well.

Would i not be just wise holding on to the house and getting someone to rent it, its in Dublin.....
I plan on building a house up the country in 3 years time. i have a site fully approved for building. how having a house in dublin will it/is it an asset or a hinderance in my situation?
will i be every able to get a builders mortgage (100k would be enough), i do have a finiance and she is working.
were would i get 30 K to pay the bank the loss...
thanks for the help
 
Oriel,

If I was you I would continue to rent out your house,you say your paying €150 a month on top of the rent for the mortgage.What are the chances that you will be out of work for the next 2.5 years(the time you have left on your fixed).If you default on your mortgage now it WILL affect your ability to get money in the future.

As was said above,you should contact MABS.ie and see how you are fixed for the mortgage subblement benefit.

Best of luck.
 

but it's not his PPR, it's an investment property? Is the government subsidising struggling landlords now?
 

Hi Kopkidda,
i think your right, thanks for the advise.
having the house for me was always going to be long term. Its on Leixlip, think i will always get it rented.
im very well educated, i have done 11 interviews in the last 2 months. i have another 1 for friday, something is bound to come up.
i am paying 600 euro rent on a gaff now up the country. im sure i could get a builders mortgage for that, me and the woman together. thats my ambition you see, i have the land, i want to build a house in a few years time.
for me having the house in leixlip, was always going to be long term, i always viewed it as my future pension.....
sure houses are bound to come back up again, sometime.

or am i wishing?
 

If you think you will be able to continue renting the place and servicing the mortgage you have a choice.

If, however, you forsee that you will get into trouble down the line and simply won't be able to keep up the repayments you don't really have a choice. Better to get out now and know your losses than continue to get deeper and deeper into trouble.

I wouldn't count on the mortgage dropping after the 2.5 years, based on current information the standard variable rate will be back above 4% by then. I really don't like the assumption some people here are making that you only have to ride out the next 2.5 years and expect your repayments to fall.
 
Cayne said:
Is this for sure? You seem pretty sure! Source?
Click to expand...

If I had a euro for every time I heard that the rates are going to go down or the rates are going to go up id be a very rich man!!It take this advice with a pinch of salt!
 
kopkidda said:
If I had a euro for every time I heard that the rates are going to go down or the rates are going to go up id be a very rich man!!It take this advice with a pinch of salt!
Click to expand...

Come on Kopkidda you were the one talking about getting mortgage supplement benefit on an investment property!!!

The best standard variable rates are about 2.5% at the moment.

Based on market information (euro swap curve) interest rates in 3 years time will be around 1.5% higher than they are now and will rise even further after that
 


I misread that it was an investment property.And as for the rates going up or down,where were all these people predicting the rates to drop as violently as they have done.You'll be searching for a while.
 
kopkidda said:
I misread that it was an investment property.And as for the rates going up or down,where were all these people predicting the rates to drop as violently as they have done.You'll be searching for a while.
Click to expand...

I'm not saying the market will be right, it's just the most objective estimate of where we will be in a few years time. It would be foolish to make financial plans based on a more optimistic scenario and prudent to plan for something more pessimistic i.e. if the market implies interest rates will rise to 4% would I still be able to keep my head above water if they actually rose to 6%
 
kopkidda said:
as for the rates going up or down,where were all these people predicting the rates to drop as violently as they have done.You'll be searching for a while.
Click to expand...

Predicting when rates will drop is a lot harder than predicting when they will rise, if we are in a historical low rate period its easy to predict that they will rise because they will. If your at normal levels its its harder to say what rates will do.

At the moment all you have to do is listen to the ECB themselves, they WANT the ecb rate to be 4-4.5% to keep inflation at 2%, just look at how slow and tentative they've been with dropping them (mush slower than the UK or USA), a low interest rate is bad for a country like Germany were they have very low personal debt and high rate of saving, and the Germans have a whole lot more to do with what the ECB will do than Ireland ever will.

Rates will rise when the eurozone comes out of recession, the problem for the Irish is we will still be in a recession.
 
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